Pakistan Regulator Seeks Shariah Exemption for Asset-Backed Digital Tokens

A Fatwa Triggers Regulatory Pressure

The Pakistan Virtual Assets Regulatory Authority, or PVARA, has asked Jamia Darul Uloom Karachi to clarify the distinction between speculative crypto assets and digital tokens tied to identifiable underlying assets. The request follows a fatwa that said crypto purchases are unlawful, a ruling that has added pressure as Pakistan moves to formalize its digital-asset market.

The issue is significant for a country of more than 240 million people, where authorities are attempting to create a clearer legal and regulatory structure for virtual assets while also addressing religious concerns about the nature of those instruments.

Two Categories Under Discussion

Bilal bin Saqib, chairman of PVARA, is working with Islamic scholars to define at least two categories of tokens that could be treated as acceptable if they meet Shariah requirements. According to the regulator’s approach, the goal is to distinguish between digital representations of tangible or claim-based value and tokens that have no underlying asset and are driven mainly by speculation.

Among the examples being examined are blockchain-recorded sukuk and gold-backed tokens that carry enforceable claims on tangible value. PVARA’s position is that these instruments should be assessed differently from tokens that lack any asset backing.

Blockchain as Infrastructure, Not an Asset

A central part of the regulator’s argument is that blockchain itself is a record-keeping technology rather than a financial asset. That framing appears intended to shift the debate away from treating all blockchain-based instruments as a single category.

Under that logic, the technology can be used to record ownership or claims linked to Shariah-compatible assets, even if purely speculative cryptocurrencies remain problematic under the fatwa. The current discussions are therefore focused not just on crypto in general, but on how different types of digital tokens should be classified.

Licensing, Stablecoins and Tokenized Assets

PVARA said it will keep engaging with scholars as it develops a national framework for digital assets. That work includes plans for a licensing regime, continued work on stablecoins, and exploration of real-world asset tokenization.

The broader objective is to identify which forms of digital finance may qualify as wealth-bearing assets under Shariah and which do not. In practice, that could determine whether some blockchain-based products gain a route forward in Pakistan while others remain excluded.

Pakistan’s effort reflects a narrower regulatory question than a simple yes-or-no stance on crypto: whether faith-based financial rules can accommodate certain asset-backed digital instruments while continuing to reject speculative tokens without tangible backing.